Travel Industry Needs More Startups & Innovators

Travel is one of the biggest – as well as the most interesting and diverse – businesses around.

In the US alone, travel accounts for over 10% of the country’s GDP, according to the World Travel & Tourism Council.

But it is a hard business for tech companies and, (in)famously, a very unfriendly market for startups.

As we all know, innovation comes from entrepreneurs who are crazy enough to challenge the status quo and build something new and exciting.

Few have succeeded in changing things.

Airbnb bypassed the entire hospitality industry and created a major ecosystem of alternative short-term rentals.

And while Uber isn’t the first thing one would consider when one looks at the travel industry, they too have gone out to create a whole new ecosystem essentially by bypassing the existing companies.

One could argue that the reason these startups came and stole so much market share is because existing industry leaders focused more on what they had, and lost the opportunity to innovate.

An example that is close to home

TripAdvisor did exactly what hotels didn’t feel comfortable doing, making reviews open to everyone.

It now exerts so much power that even the best hotels need to remain sharp to ensure they keep delivering great service.

What TripAdvisor has done for the hotel industry is just a little less than a conduct a revolution – it has managed to change how hotels operate to the point where, once again, the guest is king.

However, it started as a small team with a polarizing idea and the odds weren’t really in its favor.

When the online travel agencies came along, in the mid-1990s, way before anybody believed it could be done, they essentially did what many hotels didn’t want to do – invested in new technology and attitudes towards the storage and management of valuable data (inventory, pricing, digital assets and consumer behavior).

The result is that they’ve redirected hotel distribution from a game owned and controlled mostly by hotel chains and travel agents.

The point is, hotel and travel technology needs operators and technologists who are ready to promote change –people who will dream big, challenge the status quo and do what existing companies won’t do, because most hotel and travel technology companies are so busy doing what they do (operate), that they haven’t the time or focus inventing the future.

And yet rather than embrace the vision of the few hospitality entrepreneurs around, as an industry we tend to be overly cautious, even suspicious of new entrants and new categories within hotel tech, leaving a tiny percentage of “early adopters” to assume this risk and quick to judge when solutions fail or take longer than planned to realize.

In some respects, it’s understandable.

The lifeblood of any new hotel technology company is acquiring the hotel’s data and this requires integrations, typically with a hotel’s property management system (PMS).

For hotels, this is a costly and time-consuming process, even if the product they are buying has the necessary integration and they the hotel are sat in the correct version of the PMS.

For the PMS companies, this also becomes a significant bottleneck, as supplier after supplier requests their own unique data and integration request.

The result is we are an especially hard industry to innovate in, due to the fragmentation and on-premise nature of most systems and lack of investment in up-to-date data formats and delivery methodologies.

Systems that are hosted in the basement of the hotel might be perceived as safe, but they provide no value in an industry that is rolling (slowly) towards entry into the data economy.

Exactly the point

The next big thing in hotel and travel technology could be artificial intelligence. It could be connected devices or sensors and beacons that make hotel services and experiences more intuitive.

It could also be none of those.

Some have put forward the idea of hotels being a sort of local service hub in addition to renting rooms. Others are talking about embedding other travel services into guest stays.

There are simply hundreds of ways that the hotel and travel industry can evolve.

I can’t predict that future, but what I know for sure is that it will take innovative entrepreneurs and hotel operators establishing in-house R&D teams, who are ready to take risks in order to evolve an age old and beloved industry into for the next generations.

What all these visionaries will need is access to data.

The less friction there is to exchange data, the faster and easier it will be to integrate systems and increase the potential for innovation.

As hoteliers and hotel tech companies, it is our duty to help the industry move forward.

Hotel and travel technology companies understandably want to protect their revenue. Building closed systems with a high barrier to (data) entry might be a wise short-term business solution, but it is also the safest way to becoming irrelevant.

The investment to shift from the basement to the cloud might be daunting for smaller companies who make a stable living on these solutions.

But, simply put, the time is running out for operators who fail to invest.

Just do it

The answer obviously isn’t to go and build something yourself – however, as a hotel operator, you must start to challenge your vendors and decide is my data sufficiently accessible to permit future innovation.

However, hotels can’t sit back and wait for the entrepreneurs.

The same mindset, as intrapreneur, has to sit within the hotel operation, where either formal or pseudo R&D teams need to experiment with different technologies (once the data freedom has been achieved).

With access to the data, could a data scientist at a nearby university build for your hotel, a customized predictive pricing tool. Or could A/B test two or three different mobile check-in apps before deciding which vendor gets your business.

We’re on the verge of a significant revolution in how hotels value what is their brand on what technology will be needed to create unique guest facing products and experiences.

As search changes, mobile computing takes over and cloud-based, data accessible systems are a standard rather than the outlier.

With every major shift in technology comes a major shift in industry.

This time, however, the technology empowers the consumer, not the business.

NB: This is an analysis by David Turnbull, co-founder and chief commercial officer at Snapshot.

About Author

Founded by two travel and technology professionals with years of experience in Asia, Representasia specialises in sales & marketing representation throughout Southeast Asia for travel/hospitality technology providers and travel-related startups, as well as providing marketing consultancy services for hotels and travel businesses in the region.